selling a house in san francisco, how do we negotiate a lower commision?

Asked by R, har Mon Feb 25, 2008

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18
Jed Lane, Agent, Petaluma, CA
Tue Feb 26, 2008
Brokerage fees are negotiable by law. Any collusion by brokerages is restraint of trade. There are business models that can set you up from being a FSBO or paying a premium. Look for it and you’ll find it.
Your question is based on the word “discount”. You want or expect full service but you don’t feel you should have to pay for it. From some of the answers posted it seems that many of my associates also don’t feel that you should pay for their full service. I would bet that these are some of the same agents that won’t be agents in a few years. I also don’t believe that they know the value that can be brought to a client transaction by a professional agent.
As Mary Fenton said you the client has a lot more to lose than 1 or 2 or 3 percent of purchase price. Real estate law is very complex, the sums are large and the liability is great. A professional real estate agent is the best protection you have from future pain. One of my teachers said it best when he posed the question “If a real estate attorney will do the transaction for under $5,000 why do you, as an agent, get more?” The concept and the rule that he taught is “TIC”, the Totally Informed Client”. There is more to this than a contract, there is more to this than finding a house, and there is more to this than putting a sign in your yard and cashing a check.
R, if you don’t want or need to be totally informed or if you feel that you already are than use one of the other models.
Agents learn your value and give 110% of you ability or go do something else.
Web Reference:  http://www.jedlane.com
3 votes
Kevin Boer, , Palo Alto, CA
Mon Feb 25, 2008
As CJ has said, you negotiate commissions the same way you do anything else.

Two things to be careful about, however:

First, if somebody agrees to, say, 4.5%, make sure you find out what they are going to be offering the buyer's agent. If your listing agent keeps 3% and gives only 1.5% to the buyer's agent, you may find that mysteriously and seemingly inexplicably, not many buyers end up seeing your home. Be sure that the buyer's agent's commission is at least at the median level of buyer's agent's commission in your area.

Secondly, if the agent says something like "I'll do it for 2.5% total. I won't advertise it in the MLS. I have a big network of potential buyers and I'll find you the buyer. I'll do both sides of the deal, and I'll get the full 2.5%"...I would run, not walk, in the opposite direction. (Let me re-state that: It's probably bad form for me to recommend that you not work with any agent simply because of their compensation arrangement. However, if you were my brother and asking for advice, this is what I would say.) Not advertising a property in the MLS means not exposing it to fully 95% of the market out there, so it's difficult to see how you would get a good price for your house. Also, many people are (understandably) as uncomfortable with the notion of a Realtor representing both sides of the deal as they are with an attorney representing both sides in a divorce case.
Web Reference:  http://3oceansrealestate.com
2 votes
Britney John…, , North, SC
Wed Mar 5, 2008
Easy-ask for it. There are agencies that will list your home on the MLS for a few hundred dollars and do nothing more, but past experience says that you are wasting your money.

Another way is to sell yourself (FSBO), again expect a longer than average sale, if it sells at all.

As a general rule, unless you have an extremely desirable home, it takes lots of agent work to get it to closing and that equates to costs. The average person has no idea of the monthly costs that an agent pays before making even one sale.
1 vote
Jed Lane, Agent, Petaluma, CA
Wed Feb 27, 2008
Mike,
Why? When one of the top voices gives the question and then says the answer should be yes!

Goes to what value does the practioner place on his/her services. You are right that "why" would be a good response another would be "no". But the answer to R's question is ask. Unfortuantely R will find many agents that will say yes and give him bad service and he will join the ranks of clients that receive inadequate representation and feel that agents are not worth what we are paid.

Agents, If you don't believe that your services are worth charging for then add knowledge and increase your level of commitment , value and service to your clients or go work under any of the models that are at least honest and fortright about the level of service they provide and charge for. Don't pretend that you are giving full service if you are not.
1 vote
J R, , New York, NY
Tue Feb 26, 2008
Unfortunately, Mike, in this forum when you ask "Why" you usually don't get an answer.
1 vote
Deborah Madey, Agent, Brick, NJ
Tue Feb 26, 2008
While there are not standards for fees or commissions or even business models in the industry, not all agents or brokers will negotiate their fee structure. Some companies, and some agents, have set fee schedules and may not negotiate apart from that schedule. Each company can set it's own parameters. Agents have little to great latittude in what the fees charged will be based upon their business arrangement and contract w/ their broker.

It behooves you to investigate what services and representation you will get for your fees paid, either upfront, at contract, or at closing. Finding the lowest commission may not deliver the best result for you. Due diligence is important, and in so doing, weigh all the factors.
1 vote
Mike Kelly A…, Agent, Santa Rosa, CA
Mon Feb 25, 2008
Why do you wish to lower the commission?
1 vote
Mon Feb 25, 2008
First you need to decide how much service you need.
Web Reference:  http://www.gregorygarver.com
1 vote
Brian Harris, , Atlanta, GA
Thu Sep 18, 2008
There is no real specific way of doing what you are asking. You just have to ask for it. State your reasoning for your request. Are you asking for top-of-the-line services for a discounted rate? Either the agent or the brokerage will work with you in some manner or they will not. Does your request present a win-win situation for both parties?
Web Reference:  http://www.BrianSellsGA.com
0 votes
Arun P., Home Buyer, San Francisco, CA
Wed Mar 5, 2008
What the heck are you guys babbling about!? Mike, the answer to the question "Why" is, or should be, obvious. It's "Because I want to save some money." It's the same reason people negotiate over lawyer fees, doctor fees, accountant fees, general contractor fees, and much more. Is there something that is so different about what real estate agents/brokers do that their fees should be fixed and non-negotiable?
0 votes
J R, , New York, NY
Wed Feb 27, 2008
I find that frustrating, also, Mike. And it's one of the reasons I give thumbs down or just stop reading. Long winded discussions going into more detail than is necessary.
0 votes
Mike Kelly A…, Agent, Santa Rosa, CA
Tue Feb 26, 2008
JR, Yup!! You're right. But I've listened to too many Realtor/Licensees who immediately go into this whole detailed explanation as to everything they do when a simple "Why?" would reveal so much more. But I know it is one of the biggest frustrations of this format and the internet in general; one way form of communication!
0 votes
Mike Kelly A…, Agent, Santa Rosa, CA
Tue Feb 26, 2008
Very interesting that the responses never bothered to ask why? This just could be the format of Trulia but one agent just said YES! Capitulation without defense is cowardice. But I heard some great answers. I think we all need to bone up on our scripts and KNOW what to say when the question of brokerage fees comes up. I usually reply with "WHY?" because I find so many Sellers who are told by Uncle Fred to "get 'em down!" Also, many just don't have funds available any longer or don't understand the current dynamics of this market where standing out from the crowd is very important to get a house sold nowadays. I want the selling agent community to seek out my listings!! I would refer many of you to Bernice Ross and her great book: "Waging War On Real Estate's Discounters: How to Unlock the Door to a Full Commission". (and yes, we all know real estate fees are negotiable--full is a subjective word.)She has some great dialogues/scripts. But I hope we all don't negotiate against OURSELVES!! I usually reply that "my fee to market your home is 3%--what do you wish to pay the Selling Agent?" But just "YES"!?
0 votes
Mary Fenton, , San Francisco, CA
Mon Feb 25, 2008
Hi R! As it has been already said, all you have to do is ask. The worst they can say is "no". Some people will negotiate, others won't. Remember that you are negotiating with the person that will be negotiating for you when the time comes. You want a strong negotiator in your corner; not somebody who caves upon asking. Usually when you are talking about negotiating it is only about 1% of the asking price that is in question. A strong agent, and somebody who works hard to get your property sold for the highest possible price is most important. This may not be the right place to cut corners. Maybe they can negotiate that 1% into the price when the time comes.
0 votes
Sally Rosenm…, Agent, San Francisco, CA
Mon Feb 25, 2008
Will you be willing to lower your commission? The answer should be yes.

Cheers,
Sally
Web Reference:  http://www.sallyrosenman.com
0 votes
J R, , New York, NY
Mon Feb 25, 2008
"Will you take a lower commission?"
0 votes
Chris Word, , San Francisco, CA
Mon Feb 25, 2008
This must be "hot button" question week.

First, you are correct in understanding that commissions are negotiable. BUT, each and every brokerage you interview will be taking into account the fact that there are some fixed costs with marketing your property, and also there are fixed costs to protect you, the homeowner, from legal tangles that can arise from dealing with a difficult buyer, or a buyer who comes to get you over time because you may not have disclosed a significant issue when the home sold.

Now...you must also remember, that selling and marketing your home takes a bit of knowledge about the local market that agents will have to have. If you negotiate low enough, you will get the lowest common denominator - in other words - you'll get what you pay for. If you get an agent that caves in to your demands for the lowest commission, then you get what you pay for. Will that agent be the best (guess what, good agents with good reputations command good commissions) for your needs? Or will you negotiate low enough to be attractive to work with from an agent starting out, or one that is not so well versed in marketing your home? Will you negotiate low enough to make an unknown difficult effort worthless of the agent's commensurate fee? Also, under current trends, it helps to make sure you have an edge in marketing and salesmanship - if you go for the lowest possible margins, you will get the lowest possible efforts.

I think if you want to start at the bottom and work up, look into what Help-U-Sell can do for you. They don't ask for the highest commissions, and what they will do is send you a sales "kit". They will put your home on the MLS: you (basically) will do the rest (you're own open homes, make your own property statements, provide them with photos, complete the disclosures without too much consultation, you'll get almost NO consulting on how to prepare your home, how and why you should stage it, and no consultation on what reports you should order and how much they are). If you're up for the pioneering effort, then this is a good way to go.

Most agents and brokerages are full scale, full effort, full service. That means they will gladly share their experiences with you, along with their contacts for doing work. If you want a treat, hire a full service brokerage and tell them what you want and under what budget you want to give them. Let them run with the plan you devise together and you should be surprised what you get for the fee. In order for you to get the best dollar for your home, you're going to have to think about the fact that a more generous effort on your part gleans the very best efforts of all those that want you to succeed in getting those highest dollars!

I wish you luck and hope you find the agent that fits your needs. You DO get what you pay for.
0 votes
CJ Brasiel, Agent, San Jose, CA
Mon Feb 25, 2008
R -

The answer is: pretty much like you negotiate anything. Since most agents work completely on commission , know exactly what you are getting from your reduced commission agent. How many open houses, how much do they advertise and where? etc. etc.

Also ask questions about the agent's experience, recent sales (year-to-date), and their brokerage support.
Here is a great link with some questions.

http://homebuying.about.com/od/realestateagents/tp/Agentinte…

Good luck,
CJ
Web Reference:  http://www.TalkToCJ.com
0 votes
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